Disability Insurance

October 25, 2014

in Fundraising, Operations, Ownership, Team Building

I just posted about the terrible tragedy affecting one of our people. One big regret I have right now is that our company has not had disability insurance.

When a startup first begins, it has nothing. It has no insurance. Then it starts adding benefits. Here is an example progression:

  • General business insurance, which is required by landlords
  • Medical insurance plans
  • Dental and vision insurance
  • Short and long-term disability insurance
  • Life insurance plans
  • Retirement plans

As a startup matures, it begins to offer more of these benefits to its people.

My hardcore requirements have always been two fold:

  1. that every employee needs to maintain (either individually or through the company) at least a high-deductible catastrophic medical insurance coverage for themselves and their families
  2. that the business not be subject to on-the-job injury claims that could sink it’s cash reserves

In the case of the recent tragedy, I am upset I had not put a disability plan in place sooner. The plan would have guaranteed ongoing salary payments to his family in the tragic case of being unable to work again.

It is expensive and difficult to offer all these benefits. But it is important to offer them as it becomes feasible to do so.

What progression of benefits have you seen in your startup? Does your startup offer disability insurance?

  • http://jgmalcolm.com/ James Malcolm

    Disability insurance is probably more important than life insurance. With so many advances in life-sustaining medical care, it’s more likely you’ll be disabled than dead.

    As a startup grows, early on the risks are market, product, and competitors, but at some point key employees become an area of risk. Not everyone may need disability insurance, but covering a few principal people might be a good first step in hedging this risk.

    • melonakos

      Great points Jimi!

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